Memorandum submitted by Professor Fred
Halliday, London School of Economics

EXECUTIVE SUMMARY

1. The election of President Khatami marks
a major change within Iran to which the UK, and the west in general
should respond. A strong movement from below is pushing the President,
but unresolved constitutional, and power, relations may impede
or even reverse this process.

2. Iran's foreign policy has to be seen
in its historical and regional contexts. Iran's historic conflicts
with the outside world, both regional and global, have left considerable
resentment on both sides. Today Iran faces a difficult regional
context on several fronts, most particularly viz-a"-viz Iraq.

3. In Western eyes, the three most contentious
international issues are Iran's policy on the Arab-Israeli peace
process, weapons of mass destruction and terrorism. Each allows
of political and diplomatic resolution.

4. The UK should engage with contemporary
Iran and promote diplomatic, economic, educational and cultural
links. The time is right to build a new, equal, relationship.

I. INTRODUCTION

1. I am Fred Halliday, Professor of International
Relations at the London School of Economics since 1985. I have
been a chairman of the Department of International Relations at
LSE (1986-89), Chairman of the Research Committee of the Royal
Institute of International Affairs (1989-92) and an Academic Governor
of LSE (1994-98). I was during the 1970s a member of the Middle
East Sub-committee of the Labour Party. I am currently a member
of the Advisory Council of the Labour Party's Foreign Policy Centre.

2. I have, amongst other interests, a long-standing
interest in Iran, a country which I first visited as a student
in 1965, and which I have visited twice since the revolution,
in 1979 and, most recently, in September of this year. I have
published a book on Iran, Iran: Dictatorship and Development
(Penguin, 1978), which was translated into10 languages, including
Persian. I have, in addition to writing a number of academic articles
on Iran, broadcast on radio and TV on its foreign and domestic
policies. I have lectured on Iran at the Royal Institute of International
Affairs, the International Institute for Strategic Studies, the
Royal United Services Institute, the Arab Research Centre, the
Institute for Jewish Policy Research as well as at universities
in Britain, Holland, Egypt, Israel, the USSR, USA, Singapore and
other countries. I am a regular commentator for the BBC World
Service and the BBC Persian Service on Iran. Over the course of
more than 30 years I have met many of the leading political and
intellectual figures of modern Iran and have had contact with
a range of sources inside and outside the country. I have in recent
years kept in touch with most of the FCO officials responsible
for Iran and with Iranian diplomats working in London. The text
of what follows drawn on this background as well as on earlier
public statements on Iran that I have made.

3. My relations with both the Shah's regime
and that of the Islamic Republic have involved significant disagreements
of opinion and I have repeatedly criticised the post-1979 government
for both its human rights violations at home and for aspects of
its foreign policy. I remain, however, of the view that engagement
with Iran, at unofficial and official levels, is to be encouraged.
I am in particular of the view that the election of President
Khatami in 1997, reinforced by the Majlis elections of February
2000, represent a major change within the country and an opportunity
for improved Iranian-west and Iranian-British relations. I welcome
the exchange of ambassadors between Tehran and London, and the
resolution of the diplomatic dispute over Salman Rushdie. While
not confident about the future course of events within Iran, I
do not subscribe to the view, irresponsibly promoted by some exile
groups and too readily accepted by some western, including British
politicians, that nothing has changed or that we should not promote
relations with Iran. Too much public and parliamentary discussion
of Iran is driven by individuals and groups, who either know little
or nothing about Iran or have special agendas. Indeed, believing
as I do that the situation inside Iran is one that could develop
in a number of directions, I would argue that a strong, supportive
but critical, engagement with Iran today is in the best interests
of the Iranian people, of the Middle East and of the Muslim world
as a whole, and of the UK. Such an engagement should include not
only the FCO and other departments of state, including parliament,
but also business and academic interests and NGOs: for its part
Iran's commitment to a "Dialogue of Civilisations" should
include a dialogue with human rights NGOs such as Amnesty International,
and a dialogue within Iran itself.

4. Britain continues to occupy a special
place in the outlook, and imagination, of many Iranians: this
is something with both negative and positive dimensions. While
it may lead to unjust accusations, any easy temptation in that
will continue for many years, it also means that whatever the
UK does is given a special significance. The restoration of ambassadorial
relations has been widely welcomed in Iran. In this regard I think
it is regrettable that the Foreign Secretary has not, to date,
seen fit to visit Iran and that the Prime Minister was not able
to take advantage of their simultaneous presence in New York in
early September to meet President Khatami. The UK does have legitimate
human rights and judicial questions to raise: these are not greater
than in regard to other countrieseg Russia, Saudi Arabiathat
our ministers do visit.

5. I visited Iran most recently in September
2000 as a guest of the Institute of Political and International
Studies (IPIS), attached to the Ministry of Foreign Affairs. I
was invited to give seminars at IPIS, at the Centre for Strategic
Studies attached to the Expediency Council and to the Institute
for Political Studies of the Ministry of the Interior: these were
on culture and international relations, globalisation and civil
society respectively. I met the chairman of the Foreign Affairs
Committee of the Majlis, or Parliament, Mr Miradmadi, who recently
completed his PhD at Cambridge, the Deputy Minister of Foreign
Affairs Mr Sadegh Kharrazi, and the Deputy Minister of Foreign
Affairs, Mr Vaezi. I had discussions with the British Ambassador
to Iran, Mr Nick Browne, and other members of his staff as well
as with diplomats from several other countries. This visit aroused
considerable controversy within Iran: I was attacked in various
right-wing newspapers for, inter alia, being part of a
British plan to bring secularism to Iran and to undermine the
Islamic republic. Amongst those I met, however, there was widespread
interest in improving relations with Britain, as well as with
British universities, and a desire to set the past behind us.

II. INTERNAL
CHANGEIN
IRAN: THE
ELECTIONOF
PRESIDENT KHATAMI

6. The following analysis concerns Iran's
relations with the west and with the UK in particular. It is prompted
by the election of President Khatami in May 1997 and the promise
this holds out for a change in Iran's relations with the outside
world. Few can doubt the qualities of Iran's new president. Khatami
himself is a man steeped in the revolution and the clerical establishment:
he is related by marriage to Imam Khomeini, served as a minister
of culture in the 1980s, and was a close associate of the Imam's
son Ahmad 'till the latter's death in 1995. He is a man of integrity,
intelligent and shrewd, as well as being well read and modest.
In his development, within a Shi'ite theological framework, of
ideas of civil society, a close associate of any rule of law and
in his use of the concept of independent and rational judgement
within Islam, ijtihad, he reflects not only intellectual
developments within Iran but also more broadly those in the Islamic
world, notably in Lebanon and Iraq. As his main book, From
City State to World City, shows, this is a thinker who is
not afraid of western thought, and whose confidence in his own
theological and cultural tradition takes the form not of denunciatory
rhetoric, but of a considered, calm engagement. This does not
mean that he is in agreement with western criticisms of Iran:
he has a strong belief in Iran's national interest and in the
legitimacy of the revolution.

7. The election for president in May 1997
was not free, in that many candidates were denied the right to
stand, and political parties remain in effect prohibited in Iran.
Other relevant rights, of association, publication and assembly,
remain limited. But, for all that, Iran is not an authoritarian
country: it has advanced a long way towards pluralism of expression,
as is intermittently evident in the press and in the parliament,
the Majlis. The massive vote for Khatami was, by all accounts,
an expression of a deep, nation-wide, desire for change. This
was confirmed in the Majlis elections of February 2000. The desire
for change is not, it would seem, primarily about external relations.
It is, in the first place, about domestic order, a protest against
the bi-ganuni, literally lawless, condition of life in Iran, be
it in the administration, the role of the various militias and
security organisations, and controls on people's lives. One of
the most dramatic events which came after the election of Khatami,
the spontaneous popular rejoicing in the streets when it was announced
that Iran had qualified for the World Cup in 1998, was an index
of a similar shift of mood in the country. Second in Khatami's
priorities, and those of his voters, is that of the economy: Iran
is not a poor country, even if it is poorer than it was in the
time of the Shah. GDP per head in purchasing power is over $4,500
a year, higher than Turkey's, but much of industry is stagnant,
and there is still no clear line on such issues as foreign trade.
There is widespread underemployment and unemployment: many people
want to leave. However much this is downplayed in Iran itself,
anyone can see that the state of the economy is not separable
from Iran's international relations: as long as Iran's relations
with the USA remain subject to embargoes and blocks on credit
and technology, the prospects for full economic growth will remain
stunted. That said, many of Iran's problems are not due to the
embargo, but to domestic mismanagement.

8. If we come to foreign policy itself,
this is something which it is still not easy to discuss publicly
in Iran, especially as far as the most sensitive issues, relations
with the USA and Israel, are concerned. There is too much bitterness,
and not a little demagogy, around to make that possible: but as
Khatami has shown, he does wish to relaunch relations with the
USA and to work in a negotiated way towards some normalisation
of relations. He has recognised the greatness of American culture,
apologised for the hostages affair, condemned terrorism, modified
Iran's position on the Palestine question. He has avoided raising
the issue of a restoration of diplomatic contacts with Washington,
broken in 1979, but everyone can see that this lies along the
road. According to opinion polls, a majority of Iranians support
this.

9. The question must, however, be posed
of whether Khatami can realise his aims. His predecessor, Hashemi
Rafsanjani, was president for eight years, from 1989 to 1997,
and achieved very little in this regard: perhaps Rafsanjani's
greatest achievement was to ensure a free election in May 1997.
The obstacles are well known and should not be underestimated.
There is, first of all, an uncertain constitutional position:
it has been said that Iran has not one, but three presidentsKhatami,
Khamene'i as rahbar, leader, and fagih, jurisconsult, and Rafsanjani,
still influential and with uncertain political ambitions, as chairman
of the council for Determination of the Interest of the System
majma-vi tashkhis-i maslahat-i nizam. We have seen occasions
when Khatami and Khamene'i have spoken in divergent tones, at
the OIC summit in Tehran in December 1997: and most recently in
Khamene'i's order to the Majlis to block freedom of the press.
There are those who claim that this is a calculated divergence,
and that Khamene'i in fact supports Khatami, but even if this
is so it must have its limits. More worrying than any divergence
of views, is the distribution of responsibility: Khatami as president
may have control of the foreign ministry and even the ministry
of security, but the armed forces, and the judiciary, remain under
the effective control of Khamene'i. The latter's intervention
in August of this year to curb press freedom suggests a serious
divergence between president and leader.

10. Then there is the fact that, as a result
of the very pluralism of Iranian politics, there is no one centre
of power or policy: the Majlis contains conflicting voices, some
of them responsible, some not rather as in the US Congress; the
informal system of police and security systems remains a menace
to ordinary citizenswho exactly controls the militia ansar-i
hizbullah. Is it as we are led to believe Ayatollah Janati,
known for his view that an Islamic Republic does not need novels
or someone higher up? Finally, the task of putting Iranian politics
on a constitutional basis is far from complete. Two obvious examples.
First, political parties remain inhibitedif one of the
peculiarities of the Iranian revolution was that in effect it
never had a ruling party, with a brief and partial exception of
the Islamic Republican Party, the limiting of politics and elections,
to an informal jostling of factions and views is a major bloc
on the consolidation of legality. The weakness of parties also
makes it next to impossible to conduct orderly parliamentary business.
Secondly, there is dispute about the powers of the rahbarthose
who in December 1997 suggested that this position be subject to
a time-limit and its powers reduced were attacked and threatened
with prosecution. As his recent action over press freedom shows,
Khamene'i is not minded to yield. Equally, the powers of the maslahat
committee are unclearindeed one of the indices of political
change will be the nominations and choice of new members of this
committee and the indications it will give of the future rule
of Rafsanjani. Khatami is engaged in what one Iranian described
to me as bandbazi, a form of acrobatic rope-dancing ie a balancing
act: through the presidential and Majlis election the Iranian
people have spoken, but it is far too early to be sure that the
change which he envisaged will go through, in domestic or foreign
policy. What is not in dispute is the deep desire for change in
Iran and the interest of the outside world in this change.

III. THE INTERNATIONAL
DIMENSION

11. In assessing external relations it is
important to begin with some recognition of the obstacles which
any normalisation of Iran's relations with the outside world will
encounter. There is indeed much hostility to Iran in the outside
world. Let us begin with perceptions outside Iran, not only in
the west and the UK, most of all in the USA, but also in something
that affects the US policy, views of Iran in the Middle East,
in the Arab world and Israel. Prior to the revolution of 1979
Iran was a close ally of the west and had, to a considerable degree,
reasonable relations with the Middle East: under the Shah, the
least reasonable relations were in the Persian GulfIran
fought an undeclared war against Iraq from 1969 to 1975, a conflict
that, in my view, was the first "Gulf War" and was the
root of the two later conflicts bearing that name; it imposed
its will on the region and in particular occupied three Arab islands,
Tumbs and Abu Musa in November 1971. Pahlavi power politics left
a legacy of resentment in the Arab world. With the revolution
Iran entered into a confrontation with the region: it committed
itself to the destruction of Israel, it encouraged Islamist insurrection
in a range of Arab states, saluting, inter alia, the assassins
of President Sadat in Egypt in 1981 and President Boudiaf in Algeria
in 1993, and it fought an eight year war with Iraq, from 1980
to 1988. Its relations with the west soon entered crisis, symbolised
by the detention of over 50 US diplomats in their embassy in Tehran
for 444 days, in what the Iranians termed the jasus-khane, the
house of spies, and by a general, rhetorical and political, challenge
to western policy in the region.

12. Relations with the Europeans were, on
and off, better than with the US, but things did not run smoothly
there either. There were hostage takings in Lebanon, assassinations
of opposition leaders in Europe, and the incitement to kill Salman
Rushdie. Relations with Britain were particularly difficult but
none of the major European powers, including the USSR fared much
better. In 1997 the EU withdrew its ambassadors after Iranian
state officials, including the president and head of the intelligence
organisation, were implicated in the assassination of four Kurdish
opposition leaders in Berlin in 1992.

13. This has all added up to a rather negative
record. It is one that will have to be addressed, at least in
the sense that any improvement will involve clear and sustained
evidence that Iran has altered its policies. It would not take
much for elements in the Iranian state opposed to the president,
by word or deed, to sabotage any such improvement. This is a history
that weighs over any normalisation. It has led some, especially
in the USA to qualify Iran as a "rogue", or "outlaw",
state. But there is another side to this issue, one that must
qualify any view that the onus of historical rectification lies
with Iran. It does not behove the UK to have a one-sidedly negative
view of Iran. For all the crimes that Iran has committed, and
the irresponsible policies it has pursued, the onus of history
and of rectification dos not lie with Iran, but with those opposed
to it. To take the three major conflicts of the past century:
in the First World War, foreign troops from Britain, Russia and
Turkey all occupied parts of the country; in the Second World
War, Russia and Britain in violation of international law, occupied
the whole of Iran, a neutral country, in August 1941; in the cold
war, the US and British governments, or more specifically the
CIA and MI6, organised riots and a military coup that overthrew
the democratically elected government of Iran and its premier
Dr Mosadeq. This was an action which, its criminality aside, was,
by removing the nationalist and secular opposition movement, to
pave the way for the rise of Khomeini a decade later. Nor is this
all: the greatest act of irresponsibility towards Iran was to
come in the context of the Iraqi invasion of Iran in September
1980. Whatever provocation Iran had offered prior to September
1980, Iraq's invasion was a clear violation of international law
and the UN charter, an undisputed case of aggression. What such
an act necessitates is an immediate resolution by the UN Security
Council not only condemning the aggressor, but insisting that
it return to the frontiers prior to hostility. As has been well
documented, this did not occur: Iraqi obstruction and western
collusion delayed the Security Council for days and even then
in the notorious SCR 479 of 28 September 1980 it called only for
a cease fire in place, not a return to the status quo ante. Only
in July 1982, in SCR 514, did the Security Council get round to
calling for a return to the internationally recognised boundaries.
Iran felt, rightly, that this amounted to collusion with Iraq.

14. Iraq thus received a green light, and
large-scale military and financial help, in its war with Iran,
and was later joined by the US navy. The latter, under the reflagging
operation, sank an estimated third of the Iranian navy in the
Gulf, in a tanker war Iraq had begun, before going on to shoot
down an Iranian civilian airliner with 269 people on board. Iran's
repeated insistence on the naming of the aggressor in the war,
and on compensation, was finally incorporated into resolution
598 of 20 July 1987, but it has remained a dead letter. Iraq was
lamely named as the aggressor after it invaded Kuwait in 1990:
but no compensation has been paid, and Iranians remain prisoners
of war in Iraq to this day. This whole story is a disgraceful
one. There will be those who say that Iran deserved what it got
because of the US hostages affair. But this, itself illegal, act
has no bearing, and should have had no bearing, on the Security
Council determination of aggression.

15. The historical legacy does, therefore
matter, but some element of recognition that Iran is far being
the only transgressor is in order. A sanctimonious, one-sided
pressure on Iran by the west to apologise will be a waste of time.
Until and unless this is recognised any resolution of the historical
balance sheet will be incomplete.

16. One further historical point needs to
be made. Much is made in current critical commentary on Iran of
its aggressive character. There are Arab states which talk of
Iranian expansionism al-tawassu' al-irani. Iraqi propaganda has
even compared Iran to Israel, a "Zionism of the east",
similar to that already installed in the west. It was also common,
in the 1970s at least, to regard Iranians living in the Arab states
of the Gulf as settlers, part of some sinister expansionist conspiracy,
like that in Palestine. Anti-Persian racism was a stock in trade
of Iraqi Ba'thism at least, as was anti Shi'ism part of the officially
promoted orthodoxy in Saudi Arabia. Saddam's uncle and father-in-law,
Khairullah Tulfah, published a book entitled Three Whom God
Should Not Have CreatedPersians, Jews and Fliesand
note the order. The Shah was imperial in his policies, but we
should be wary of how far such stereotypes remain latent in Arab
criticism of Iran. As for the record on matters of aggression,
the picture is rather different. Compared to any of its near neighboursRussia,
Turkey, Iraq, all of whom have repeatedly invaded other countriesIran
has, over the past two centuries, a record more pacific than any.
The last time that Iran occupied any other country was when Shah
Aga Mohammad took, or rather retook, the Transcaucasian states
of Armenia and Georgia in the 1790s. These had long been part
of the Iranian political and cultural world. In the 1820s Iran
lost these areas to Russia, a loss to which it has remained remarkably
reconciled: almost no one in twentieth century Iran, a century
noted for its obsessive and self-pitying nationalist claims to
territory far and near, challenged that loss of territory. Iran
did occupy the three Gulf islands in 1971, but this was after
it had conceded on the much larger and more sensitive claim to
Bahrain, and had sought a peaceful resolution of the islands issue.
We may accept, or not accept, the legality of the treaty concluded
with the Amir of Sharjah on Abu Musa and deny the right of Iran
to take the two Tumbs from the Sheikh of Ras al-Khaima by force:
but the occupation of these islands is no indication of a broader,
expansionist drive. To sum up, Iran has, overall, been one of
the most pacific, and restrained, of states in the Middle East
in modern history.

IV. IRANIAN FOREIGN
POLICYAND
REGIONAL CONFLICT

17. Turning to the present, we can now consider
Iran's place in the region, and its relation to regional conflicts
on or near its frontiers. It is these regional issues, as much
as issues in bilateral UK-Iran relations, which bedevil relations
with the outside world. It may be that the first such conflict
which will occur to people is the Arab-Israeli, but this would
be mistaken. The Arab-Israeli is far from being the sole, or most
costly in human lives, of the conflicts besetting the region:
any policy towards Iran determined solely by Iran's views on this
conflict would be distorted. The Arab-Israeli dispute is one of
several, indeed close on a dozen, regional conflicts in which
Iran has been, and remains, involved. The record is not always
one that does credit to Iran, but nor is it one that sets Iran
in an especially, or uniquely, negative light.

18. To take the Gulf itself. Few can doubt
that, over the past two decades, the main source of aggression
and instability in the Gulf has been Iraq. One need not labour
the history of the eight year war with Iran or the occupation
of Kuwait. Iran, it must be emphasised again, paid the heaviest
price for this: many tens of thousands dead, cities destroyed,
economy disrupted. Much is made of the Scuds that Iraq launched
against Saudi Arabia and Israel in 1991, and rightly so: but Iraq
has in all launched around 390 scuds in its recent wars, 308 of
them ie around 80 per cent, against Tehran and other Iranian cities,
with the loss of over 2,226 lives and 10,705 injured. [8]There
is no reason, despite the containment of the 1990s, to presume
that this pattern of Iraqi behaviour is over. For all its current
weaknesses, Iraq promises more danger for the whole region. Iraq
will, on current expectations, become a major oil exporter again,
it will become a significant military power and it could then
turn on that state which has been its major enemy, Iran. That
is why for the foreseeable future Iran's major security concern
and the issue that gives meaning to its foreign and security policy,
will remain Iraq.

19. Elsewhere in the Gulf, in the early
1980s Iran was supporting opposition groups in Kuwait, Bahrain,
Saudi Arabia, even Oman, but this has now ceased, in large measure,
to be the case. The causes of opposition in those countries are
not made in Iran but in the denial of democratic and legal guarantees
to the populations of those countries. In the case of Bahrain
in particular, we see a recalcitrant government, refusing to meet
popular and reasonable demands for a return to the constitution
abolished in 1975. It is exactly this kind of undemocratic policy
that runs the risk of provoking unrest in the future. The Bahraini
state is still unwarrantedly indulged by Britain and the US in
this refusal: Labour policy on this has done them no credit. On
the islands, there remains room for compromise, but it is not
one that will be helped by Arab nationalist exaggeration of Iran's
overall intentions, nor by moves, such as support by Gulf states
of the Afghan taliban, that have been seen by Iran as part of
an Arab attempt to encircle it on the east.

20. Turning to Afghanistan, we have here
one of the sorriest, most criminal, chapters in the history of
west Asia, one in which three countries in particularPakistan,
Saudi Arabia and the USAhave over two decades sought to
destabilise that country and impose on it a collection of terrorist
gangsters. The British government and its security services were
active participant in this foolish and costly venture. The PDPA
regime that came to power in April 1978 in Kabul was, in its first
20 months in power especially, responsible for terrible human
rights crimes: but I was, and remain, of the view that the stabilisation
of that regime, accompanied by an opening to opposition groups,
was the best hope for the future of Afghanistan. One need only
look at the ex-communist regimes of Central Asia today with which
the UK is happy to trade and have relations. Nowhere is the myth
of western hostility to political Islam turned on its head more
than here, where in the largest covert operation in its history,
the CIA backed the likes of Gulbuddin Hekmatyar, who first rose
to prominence throwing acid in the face of women students at Kabul
university, in his fight against the PDPA regime. With the predictable
civil war between supposed allies that followed the collapse of
the PDPA regime in 1992, Pakistan, with Saudi money, has now created
an even greater monster, the taliban, an organisation whose contempt
for human rights, for women and now for the rights of ethnic minorities
is known to all. That Pakistan is now reaping the fruits of this
irresponsibility, through the proliferation of arms, drugs and
inter-ethnic strife should bring no comfort. It does, however,
set in some perspective any claim that it is Iran, a country which
has hosted over two million Afghan refugees largely at its own
expense, but which played a secondary role in the Afghan conflict,
which is the major source of instability in the region. Indeed,
it is a strange irony that the one area in which Washington and
Tehran are now, prior to any general normalisation, engaged in
direct negotiation, through what is termed the "Six plus
two talks", with a view to conflict resolution, is Afghanistan.

21. In the republics of the former Soviet
Union Iran has not pursued particular advantage in the former
Muslim republics of the USSR. It has implemented what has been
termed siasat-i dast-i gol, the policy of the bouquet of flowers,
ie greeting whoever turns up at Tehran airport from those countries
irrespective of ideology. In Tajikistan Iran has, in conjunction
with other Central Asian states, sought to mediate. In the Nagorno-Karabagh
dispute Iran has, contrary to any supposition of Islamic solidarity,
formed an alliance with Armenia against Shi'ite but pro-Turkish
and pro-American Azerbaijan.

22. Iran's policy in another part of the
former communist world, namely Bosnia, is also worth mentioning:
from the imprecise information available, it would seem that Iran
supplied arms and security personnel to Bosnia in the period 1993-95
in violation of the embargo on supplies to both sides. A mistaken
policy, it might be said, and evidence of Iran's interference
in countries far from its frontierthe first time, indeed,
that Iran had played a militarily significant role on European
soil since the time of the battle of Thermopylae, in 480 BC, a
while ago. But on closer examination it turns out that this Iranian
involvement, for which it has subsequently been condemned in the
west, was carried out with the knowledge of, and, tacit acceptance
by the US government and the CIA in particular. Just as Washington
was doing what it could to circumvent the embargo, and aid both
the Croatians and the Bosnians, it allowed Iranian men and material
to reach Sarajevo. This was, therefore, hardly an index of Iran's
rogue or outlaw behaviour.

23. We can now come to the most contentious
issue of all, the Arab-Israeli dispute. Here the record one that
certainly merits criticism. Since the revolution of 1979, Iran
has not only had no relations with Israel but has, implicitly
and on some occasions explicitly, denied the right of an Israeli
state to exist. In this its policy is rather similar to that which
China, forever denouncing Soviet "revisionist" indulgence
of Israel, pursued from the mid-1950s until the late 1970s. Iran
has in addition provided some material aid to one of the Palestinian
groups most opposed to the state of Israel, Islamic Jihad, and
has also, through Syria and its Islamic Guards units in Lebanon,
backed the Lebanese Hizbullah. The central point, that Iran has
not only criticised Israeli policy, but has also promoted a policy
aimed against a two-state solution, was until recently valid.
It represented a throw back to the intransigent, rejectionist,
Arab attitudes of the 1950s and 1960s and in no way accorded with
Iran's national interest. Nor does it accord with the interests
of those, in Palestine and Israel, who support the kind of two-state
compromise that is made possible by the 1993 Oslo accords.

24. Contrary to most people, however, I
do not think external pressure will make that much difference
to the Israeli-Palestinian relations: the key lies in the evolution
of opinion within both nations. The idea of a bi-national state,
involving Palestinians and Israelis, has long ceased to be relevant,
if it ever was: but the peace process is a bi-national one, since
it involves support, what in Northern Ireland would be termed
"sufficient consensus", in both communities. The last
thing the Palestinians need is Iran, or any other state, engaging
in self-indulgent rhetorical excess from afar. The Palestinians,
and the large number of people in Israel who are willing to envisage
a two-state compromise, including on east Jerusalem, need a firm,
critical and responsible, engagement by Iran in the process, the
better to secure a just and lasting settlement. This is something
the Syrians, rather too comfortable in their rejectionism, could
also do more to engage in. But this is not a one-way process either.
Iran is criticised for having refused to recognise the right of
the Israelis to a state, but the obverse also applies: an Iranian
engagement in negotiations on a two-state solution will make little
difference if those in Israel and elsewhere who, in a mirror image
of anti-Israeli rejectionism, have persisted in their refusal
to accept the right of the Palestinians to their state, on the
territory occupied by Israel in 1967, continue to do so.

25. The support for Islamic Jihad and, indirectly,
for Hamas may be less significant than is claimed: no only argues
that these groups get their main support from Iran. As for Hizbullah
in Lebanon, we are dealing here with an organisation that is both
political and military: like Sinn Fein/IRA in Ireland it is not
a purely military organisation; in Hizbullah's case it has representatives
in the Lebanese parliamentno boycotts here. The hope must
be that now that the issue of the occupied security zone in southern
Lebanon has been resolved, by an Israeli withdrawal, politics
can prevail in Lebanon. Iran has assisted this process, supporting
the incorporation of Hizbullah into Lebanese political life, and
encouraging an Israeli withdrawal in return for a cease-fire.
This is arguably the best news to come out of the region for some
time.

V. THREE DISPUTED
ISSUES

26. The picture painted here of Iran's regional
involvements is designed to underline two points: first, that
Iran's regional policies cannot be seen in relation to one specific
conflict, and certainly not the Arab-Israeli, but as part of an
attempt to manage, and in some cases take advantage of, a broader
mosaic of conflicts; secondly, while some of Iran's policiesits
official position on Israel most of allhave contributed
to exacerbating regional problems, Iran is far from being the
only, or even main, source of instability in the region. There
remain, however, specific questions that stand in the way of an
improvement of western relations with Iran, three issues that
recur in US and EU statements, to which UK policy is sensitive,
and which have to be addressed in their own right. The first is
the Arab-Israeli question itself. Iran has already moved some
way on this: by meeting twice with Arafat at the OIC summit in
December 1997, and by denouncing terrorism, Khatami has opened
the possibility, one cannot say more than that, of the kind of
change mentioned above. Meanwhile, the progress of peace in Lebanon
has removed the greatest single irritant in Iranian-Israeli relations.

27. Involving both the Gulf and Arab-Israeli
contexts, is the second issue, that of weapons of mass destruction,
specifically nuclear weapons. The charge is two-fold: one that
Iran is, at its Bushehr nuclear plant, engaged in a programme
that will give it nuclear weapons material, probably in a few
years; two, that at the Shahid Himmat Industrial Group research
facility south of Tehran it is, with Russian help, assembling
the materials for a missile based on the Russian SS-4 with a range
of 1,250 miles. Both are being carried out, it is claimed, with
Russian help. Israel and the USA, not to mention Prime Minister
Tony Blair and Foreign Secretary Robin Cook, have been trying
to get the Russians to stop this flow of material and expertise
to Iran, as the Americans have with regard to the two other states
believed to be helping Iran, China and North Korea. The Iranians,
of course, deny both charges, but given the region they are in,
and given to date the quite unreliable character of Russian export
controls, one would be prudent in suspecting that some programme
is afoot. It is not necessarily a crash programme and much will
depend on what happens in Iraq, but the probability is of such
an intention. No one suggests that Iran would use this material
in the short run and it is in all likelihood designed as a deterrent
against Iraq. But in Israel in particular there is concern. The
Israeli position is that Iran and Iraq now constitute its two
main enemies, and they believe that Iran will within a short time
have a missile capability capable of hitting Tel Aviv. In these
circumstances, and given the precedent of the 1981 Israeli attack
on the Osirak nuclear plant in Iraq, there remains a danger of
an Israeli strike against Iran.

28. Iran has, of course, denied any such
intention or capability. It has signed the Non-Proliferation Treaty
and the International Atomic Energy Act, both of which permit
international inspection, as it has the treaty on chemical weapons.
But in the current climate of the region this will not be sufficient.
The long-term solution has to be to find a way of creating a security
framework for the region, through arms control agreements and
confidence building measures, that will, if not remove all nuclear
weapons, reduce fears of their irresponsible, or first, use. Here
it is essential to remember why Iran faces a threat: it is not
from Israel, nor from the west, but from states nearer home, notably
Iraq. The precedent for such a security framework exists in the
European casein the negotiations and building of confidence
that began in the 1960s and have continued to this day in the
context of the OSCE. Of little relevance to the Middle East, it
may be said, given the even lower levels of trust, the disproportion
between Israeli and other states' capacities, and the multiplicity
of conflict lines, in contrast to the single, east-west division
in Europe. All this is true, but there are countervailing arguments.
First, Israeli predominance is, as the Israelis are the first
to say, a dubious one, given the very small geographical space
their country occupies: other states in the region could survive
a nuclear hit, Israel might not. Secondly, we have elements of
confidence building over the past 20 years: the frontiers between
Egypt and Israel, and Syria and Israel, have been stable if not
cordial, while in the Gulf Iran has engaged in some limited confidence
building measures, such as prior notification of naval and air
manoeuvres. In the case of the Middle East the same political
logic applies; the time to think about it is now. It is a pity
that, when, on the initiative of Prince Hassan of Jordan, suggestions
on this were floated in 1997, Iran rejected them. It would seem
to be wiser to look again at confidence-building measures, something
that involves the interests of all in the region. Linked as it
could be to a significant shift on the Arab-Israeli question,
this could provide a way of lessening concern about the purposes
of Iran's military programmes.

29. The issue of terrorism, the third contentious
question on the list, has also been given prominence by Iran's
critics, and it is one that President Khatami has sought to address,
distinguishing as the OIC final statement of 1997 did between
terrorism, which was condemned, and acts of violence in pursuit
of national liberation, which was legitimate. This is a distinction
which everyone, in any religious or ethical system, can accept.
If we look at the Iranian practice, we see that for much of the
revolutionary period Iran has pursued its political enemies with
ferocity and has violated human rights in the process, to a degree
far greater than did the Shah. Iran's enemies have certainly made
much of this, especially in the USA. Sometimes this has been based
on facts, but sometimes not: the passage by the US Congress of
the Iran-Libya Sanctions Act in 1996 took place at a time when
both the Oklahoma Bombings, and the TWA 800 disaster, were blamed
on Islamic groups linked to Iran. Here too there needs to be more
precision. First of all, by far the greatest number of human rights
violations by the Islamic Republic have occurred inside, not outside
Iran, and against Iranians themselves. Everyone in Iran knows
this, and it is the end of such abuses that, is in part, the promise
of Khatami's support for the rule of law. I would include in this
category of violations not only persecution of political prisoners
but also two particular consequences of the post 1979 interpretation
of Islam that are in flagrant contradiction of international norms:
the denial of civil and religious rights to Bahai and the coercive
imposition of the veil on women. Both are in violation of UN conventions
to which Iran is a signatory. How it works out in the future is
a matter for Iranians, not least the question of how to resolve,
and settle, the deaths and disappearances of the early part of
the 1980s and 1988. Perhaps Iran needs a truth commission, perhaps
a historic documentation of human rights abuses, by the state
and its opponents. One cannot say, however, that Iran is the only
country in the region where human rights violations have occurred:
one can think of at least four of its neighbours where the human
rights record over the past two decades has been deplorable.

30. Terrorism abroad involves two forms
of activity: support for armed groups and assassination of enemies
of the Iranian regime. Support for armed oppositions has certainly
occurred though not always, as the cases of Afghanistan, Iraq
and Bosnia show in ways that western states disapprove of. The
case of Lebanon allows of a political solution, linked to rationalisation
of Iran's position on Israel. As for the Arabian Peninsula, it
would seem that Iran has abandoned support for armed opposition
groups in these Arab states. This leaves unanswered the question
of the Khobar bombing in Saudi Arabia in 1996: but since there
is no published evidence on this, and since Saudi Arabia has itself
sought to improve its relations with Iran, this should not constitute
an obstacle to improved relations between Iran and the west. Assassination
of enemies abroad was a pattern of state activity up to the early
1990s: it claimed the life of, among others, two people I knew,
Abder-Rahman Qassemlu, the KDPI leader, enticed by regime into
agents into supposed negotiations in Vienna in 1989 and then murdered
at the third meeting, and Shahpur Bakhtiar, a long-time opponent
of the Shah and transition prime minister in 1979, who entered
in the 1980s into an unwise alliance with Iraq, and the CIA, against
Tehran. More recently there was the murder of more KDPI leaders
in the Mykonos restaurant in Berlin, in 1992. But the incidence
of that kind of action virtually ceased thereafter. It is, moreover,
worth noting that the US argument on Mykonos proving the failure
of the EU "critical dialogue" is mistaken, since the
dialogue only started in late 1992, after the killings in the
Mykonos had occurred. One could argue, but not prove, that the
European "critical dialogue" of 1992-97 can count the
diminution of assassination as one of its successes. The situation
in the countries immediately around Iran is, of course, less clear,
but here one has to distinguish between those who are themselves
involved in military opposition to the Iranian regime and those
which are not: for the Iranian regime to attack those who are
themselves seeking to overthrow it by force may be illegal but
is hardly, by any international standards, a form of terrorism.

VI. IMMEDIATE
PROSPECTS

31. Where does this leave us in terms of
the possibilities of improvement in relations between Iran and
the west and between Iran and the UK? Since 1997 we have seen
a marked improvement. President Khatami has initiated a new policy
at home and abroad, and there has been some reciprocation from
the west. The EU including the UK has returned its ambassadors
and dialogue has resumed, on the lines outlined above. In the
US case friendly gestures have included the placing of the Mojahidin
on the terrorism list, Clinton's message to Iran on Eid-i Fitr
in 1998, sporting contacts, and some easing of visa and trade
restrictions. US military officials in the Gulf have made clear
that their activities there are not directed against Iran. In
Washington itself opinion is certainly moving a bit: there is
no enthusiasm for sanctioning foreign firms that are deemed to
have violated the Iran-Libya Sanctions Act, and a number of voices,
academic, political and in the oil industry have called for an
end to the policy. One swallow does not, however, make a summer.
We have been there twice beforeonce, in 1986 with the Iran-Contra
affair, and again, in 1989, with George Bush's tentative overture
in his inaugural address as president. In both the USA and Iran
there are lobbies who are against any improvement in relations.
Israel too, concerned about the issue of missiles, is also circumspect.
Both sides are also wary because they have still fresh in their
memories occasions when they got burnt by attempts to open contactsfor
the Americans it was Iran-Contra, for the Iranians it was the
US-Iranian meeting in early November 1979 in Algiers, between
premier Bazargan and presidential adviser Brzezinski, which precipitated
the occupation of the US embassy.

32. In immediate terms, it is clear what
both sides want. The Iranians lay special emphasis on two things:
the return of the Iranian assets, mainly credit for military equipment
not delivered, and held since 1979, and an easing of travel restrictions
between the two countries. More generally, they want to see a
lifting of the economic sanctions on Iran, with regard to investment
in Iran and Iranian participation in the Caspian development.
The Iran-Libyan Sanctions Act of 1996 has a time limit: it will
lapse in August 2001, unless renewed. On the US side the list
is clear, the issues discussed above. Progress should be possible,
with the caveat that neither the US nor the Iranian president
controls everyone in their own political, or state, systems: provocations
of all sorts are possible.

33. In the longer-run, and arising out of
the analysis I have offered above, I would suggest four areas
to which attention might be drawn. First, if there is talk of
history, and of historical wrongs, this must be two-sided. It
is no good the west, or the UK, criticising Iran for what it has
done in the past century if the west, and the UK, does not to
some degree acknowledge what it has done. Secondly, the solution
to the regional problems, not least those of nuclear weapons and
missiles, cannot come through military means alone: the source,
and the solution, lie in the mosaic of inter-state insecurities
in the region. These have to be addressed in a spirit of confidence
building, in order to create a regional security system. If Iran's
particular sensibility vis-a-vis Iraq has to be addressed, Iran
has, for its part, to address the consequences of its past policy
towards the Arab-Israeli question. Thirdly, in Iran's relations
with the Arabs, we should get away from the presentation of the
conflict, beloved by nationalists on both sides, as being something
timeless and inevitable: the two people have rubbed along reasonably
well over the centuries, it is modern nationalism, shaped by the
antagonisms and lies of states, that has given it its critical
character. I did not say they can, or will, love each other, but
they do not need to go to war, or sustain strategic rivalries.
Finally, on UK-Iran relations, I would only stress the opportunity
and the importance, of the current situation in Iran and the potentially
positive role which the UK could, and should, play. I do not think
that UK policy should be held back by partisan, or domestic considerations
nor, while paying due attention to the views of the USA, should
Washington be permitted to obstruct our initiatives. In this context,
I welcome the Foreign Affairs Committee's inquiry into relations
with Iran and hope that it will provide the context for a fruitful
development of relations between the two countries.